Disclaimer: The information on this page is general information based on Indiana law, and is not intended to be interpreted as individual legal advice. This information is written for homeowners living in the property they are trying to protect; the foreclosure process for rental properties, vacation homes, and commercial properties will differ. For advice specific to your circumstances, you should consult an attorney.

The Stages of Indiana's Residential Foreclosure Process:

Stage 1: Pre-foreclosure

When a homeowner misses the first payment, the lender or servicer (the company processing the loan payments) will typically send a letter to the homeowner demanding payment. The servicer may also call the homeowner requesting payment.

After the second (and third) missed payment, more letters will arrive from the lender. One letter will have a heading of “Get Help. Get Hope”. This letter, which must be sent to the homeowner at least thirty (30) days before a foreclosure action is filed, provides information about getting free mortgage foreclosure counseling through the Indiana Foreclosure Prevention Network.

The homeowner may also receive additional letters urging the homeowner to contact the lender to apply for a loan modification, and may even receive a loan modification application package.

Foreclosure can be filed at any time you fall behind (or “default”) on payments, but lenders usually wait until a homeowner is at least 90 days behind.

Stage 2: Filing of Complaint.

The court foreclosure process starts when the lender’s attorneys file a document (commonly titled as a “Complaint” or “Petition”) with the court in the county where the house is located.

The Complaint sets out why the lender believes that it is entitled to foreclose on the home, and how much the homeowner owes on the loan. Copies of the note and mortgage should be attached. The Complaint will name the homeowner(s) as defendants, as well as any other people or entities that have (or may have) an interest in the home.

The Complaint is accompanied by a “Summons,” which is the official notice to the homeowner that they are being sued.

Usually within a few days after the Complaint is filed, copies of the Summons and Complaint will be “served” on the homeowner. Service can be done in person, by leaving a copy on the door of the home, or via certified mail. DO NOT ignore the Summons or the Complaint. It is also important to note when and how you received service, because this will affect when your response is due.

Stage 3: Court Pleadings & Settlement Negotiations.

Answering the Complaint. The homeowner has a specific number of days to respond to the Complaint. This response is called an "Answer."

If the Complaint was handed to a person or was left on the door, then the homeowner has twenty (20) days from the date of service to respond.

If the Complaint arrived in the mail, then the homeowner has twenty-three (23) days from the date he or she receives the Complaint to respond.

No attorney? Be careful! Homeowners proceeding in an Indiana court without an attorney must still comply with and follow all of Indiana's court rules and procedures. In addition, each county has its own rules and procedures that have to be followed. Click here for ways to find an Indiana attorney to defend you. Click here for links to find court rules and other resources for individuals representing themselves.

In the Answer, the homeowner should respond to each allegation in the complaint, then tell the court about any defenses and/or counterclaims against the lender.

Get Help! Whether - and which - defenses and/or counterclaims can be raised will depend on each homeowner's individual circumstances. You should consider engaging a knowledgeable attorney and/or a housing counselor to review your case for defenses and counterclaims.

If you need more time to file your Answer, you can request an extension of time to file from the Court. This request must be made in writing and filed with the Court before the due date.

Settlement Conference.The lender is required to provide a written notice to the homeowner that he or she has the right to a Settlement Conference with the foreclosing lender. This notice may be included with the Summons and Complaint (usually stapled on the back), or may be mailed separately.

Settlement negotiations do not stop the foreclosure process! Even if you are actively working with your lender to get a loan modification or to sell your home, the lender can - and will - continue with the foreclosure in the courts.

To request a Settlement Conference, simply fill in and sign the form and mail it back to the court (with a copy to the lender's attorneys) within thirty (30) days of receiving the Complaint. If you can't find the form, a generic copy of this form is also available here.

DO NOT ignore this opportunity! If you want to try to settle with your lender, you must contact the court within 30 days of receiving the notice to request a conference. During this period, the lender is not permitted to request a foreclosure judgment. However, if the homeowner does not request a settlement conference within 30 days, then the lender will proceed with the foreclosure.

The Court will set a date, time and location for the conference, and send copies of the notice to the homeowner and the lender. The lender's attorney will probably also send a packet with forms and a list of information and documents they want you to provide.

Before the conference, fill out and sign the financial information forms provided by the Court or your lender and gather copies of the requested documents and information. If at all possible, this package should be sent to the lender's attorney at least one (1) week before the date of the settlement conference.

At the Settlement Conference, the lender will be represented by an attorney, and a representative from the lender will probably be available on the phone. You also have the right to be represented by an attorney or a mortgage foreclosure counselor.

The lender's attorney will give you documents showing the amount required to reinstate your loan, and the amount required to completely pay off your loan. You may also discuss the various options available to you, including loan modification, short sale, or deed-in-lieu. See the Foreclosure Alternatives page for additional information.

Don't be surprised if the lender doesn't agree to a modification on the spot. Expect the lender to request additional information from you, and to say that the lender will have to review your documentation before making a decision.

The lender will file another notice with the court with the results of the settlement conference. If settlement was not actually reached during the conference (even if the lender takes your information and agrees to consider a loan modification or other foreclosure alternative), the lender will then continue the foreclosure process.

If the Settlement Conference at the court does not work, you can still continue trying to negotiate with the lender for a loan modification, short sale, or deed-in-lieu. See the Foreclosure Alternatives page for more information.

Stage 4: Successful Settlement or Judgment.

Successful Settlement. “Settlement” means reinstatement, loan modification, a short sale, a deed-in-lieu, or an agreed judgment. However, even settlement may not mean that the foreclosure lawsuit is over. See the Foreclosure Alternatives page for more information.

Get it dismissed! In a reinstatement or a loan modification, if the foreclosure action is not dismissed, and the homeowner misses another payment, the lender has the right to re-start the foreclosure process from wherever it left off. If a judgment entered before settlement is reached, then the lender can immediately start the sheriff’s sale process.

Judgment. If there is no settlement, or while settlement negotiations continue, the lender will request a judgment against the homeowner. A Judgment establishes a specific amount owed on the loan (including attorney’s fees and costs), and permit the lender to have the home sold at a Sheriff's Sale.

If the homeowner did not file an Answer, then the lender's attorneys will file a motion for a Default Judgment against the homeowner. This motion is almost always granted.

If the matter is not settled, but the homeowner does file an Answer, then the lender will probably request a Summary Judgment against the homeowner.

If the court does not enter summary judgment against the homeowner, then the lender may request that the court set the case for Trial.

Default Judgment.

If the homeowner does not file an Answer, the lender and the Court assume that the homeowner does not dispute the lender's claims.

The lender's attorney files a motion for a default judgment. The amount requested will include the unpaid principal balance, accrued interest, and money advanced for property taxes, insurance, filing fees, attorney fees, and any other costs or expenses the lender claims to have incurred in protecting its right to take your home.

Watch the Calendar Closely! If the homeowner does not file an Answer or request a Settlement Conference before the deadlines, the lender can request a Default Judgment only 30 days after the complaint is served, and the Court can enter a Default Judgment within days.

The Court will then enter a Default Judgment against the homeowner for the entire amount requested by the lender.

Summary Judgment

A Summary Judgment is a ruling by the court that the lender is entitled to a foreclosure, without going through a full trial.

The lender will submit affidavits, a legal memorandum, and any other documents that the lender wants the court to consider when making its decision.

The homeowner / defendant has thirty (30) days to file a Response to the Motion for Summary Judgment with the Court and with lender’s counsel.

In the Response, the homeowner makes his or her legal arguments for denying summary judgment for the lender. The homeowner may also provide additional documents to the court that support the homeowner’s position as attachments to the Response.

The court may schedule a hearing on the motion, where each side will make an oral presentation about its position.

After the hearing, the court will issue a written ruling that either grants or denies summary judgment.

If the court grants the lender’s motion for Summary Judgment, then the court will enter an Order of foreclosure against the homeowner which states the amount owed to the lender and authorizes the lender to proceed to a Sheriff's Sale.

If the court denies the lender’s motion for Summary Judgment, then the matter will continue towards trial. The lender may also file a second motion for Summary Judgment.

Most lender motions for summary judgment are granted.

Trial. At trial, all parties have the opportunity to present evidence either in support of their positions, or to refute another party’s position. This evidence is presented to the judge; homeowners do not have a right to a jury trial in a foreclosure proceeding (although certain counter-claims may be tried to a jury).

After the trial, the judge will rule on the case. Some judges may make a ruling from the bench as soon as the trial is over, and others will take some time before entering a verdict.

If the court rules in the lender’s favor, then the court will enter a foreclosure judgment against the homeowner.

Stage 5: Post-Judgment.

Sheriff's Sale

This process starts when the lender files motion, called a “Praecipe for Sale,” with the court. The court then forwards a certified copy of the foreclosure judgment to the county sheriff. In Indiana, the sheriff’s sale can not happen until at least 120 days have passed from the date the court certifies the judgment.

The sheriff will serve a written notice of the sheriff’s sale on the homeowner. If someone is living in the house, this notice will also be posted on a door to the house.

The county sheriff is also required to advertise the sale in a local paper once a week for three (3) consecutive weeks. The first advertisement must be published at least thirty (30) days before the date of the sale.

On the day of the sale, the sheriff (or the sheriff’s staff) offers the property for sale to the general public at the location designated in the written notice. Indiana law requires that the sale be held “in a manner that is reasonably likely to bring the highest net proceeds from the sale after deducting the expenses of the offer and sale.” IC § 32-30-10-9(a). The actual process on the date of the sale will vary from county to county.

Often, the lender will offer the amount of its judgment against the homeowner as its “bid.” If the lender’s offer is the highest bid, the lender is the “winner,” and takes title to the house. If a third-party’s bid is the highest bid, then he or she becomes the winning bidder.

The sheriff will report the results of the sale to the court, and the lender will then ask the court to confirm the sale.

If confirmed, the court will order a new deed for the buyer, and distribute the proceeds of the sale.

Sale proceeds are applied first to the expenses of the sale, then to any unpaid property taxes, and then to the balance owed on the first mortgage (including principal, accrued interest, and costs). If any proceeds are left, then any other lienholders are paid in order of their priority.

If anything remains after all costs and liens on the house are paid, then that amount is paid to the court for distribution to the debtor. If there is not enough money from the sale to pay all the liens and costs, then the homeowner may owe additional money to the lender (a Deficiency Judgment).

The sheriff will issue a “Sheriff’s Deed” to the winning bidder. This deed transfers ownership of the house, free and clear of the prior homeowner’s interests in the house. The new owner is entitled to possession of the house, and may now start eviction proceedings, if someone (e.g., the homeowner or a renter) is still living in the house.

The homeowner has the right to remain the home until the house is sold at the sheriff’s sale. However, it is recommended that the homeowner secure alternate housing and remove all of his or possessions out of the house as soon as possible. Visit the Resources page for information about housing solutions.

Deficiency Judgments

If the sale price of the house at the sheriff’s sale is less than the amount of the judgment, you may still be liable for the difference (the “deficiency”).

This deficiency is an unsecured debt, and you may be subject to additional letters and phone calls trying to collect this debt (if it has not been discharged in bankruptcy). The lender may either try to collect this amount itself, or may sell this deficiency to a debt buyer or debt collector.

The deficiency amount is typically dischargeable in bankruptcy. See the Bankruptcy page for more information.

Homeowners can try to settle this debt for less than the total amount owed, just as with other unsecured debt.

Income Tax Consequences

If you borrowed money from a commercial lender and the lender later cancels or forgives the debt, you may have to include the cancelled amount in income for tax purposes, depending on the circumstances. If you receive a Form 1099-C, you should consult a tax professional regarding any income tax implications.